Oil prices have diverged wildly the past few weeks as Brent breaks out to new highs while Canadian crude price dive due to higher transport costs and full storage tanks. The heavy oil discount (difference between WTI and Western Canadian Select) widened to over US$26 a barrel this week. Canadian light oil is selling at a US$8 discount to West Texas Intermediate (WTI), despite being similar in quality.

Alberta's oil sands output is expected to rise by 315,000 bbl/day next year and another 180,000 bbl/day in 2019 while the country is unlikely to see additional export capacity before late 2019 at best.

The shift is expected to be a big positive for Canada's rail operators, CP and CN Rail, as transport by rail remains the only viable alternative. CN Rail announced plans to purchase 200 new railcars from GE locomotive this week in order to keep up with demand over the next three years.